Navigating the winter period when it comes to gas is always tricky. How have you found the last few months?

The record levels of storage achieved before the winter, combined with a generally mild winter season and a modest demand for industrial gas compared to previous years, have resulted in low gas prices on European markets, perhaps beyond any optimistic prediction.

Certainly, compared to the past, the increase in LNG import capacity and the new regasification terminals have improved Europe's ability to manage its gas needs. On the other hand, however, it should be noted that we have gone from a dependence on gas supplies offered by a few designated counterparts via pipelines, some of them affected by high political instability, to a new dependence on LNG imports which exposes European countries to new risks. First of all, price risks, since Europe today is bound to compete with the rest of the world to attract the quantities of LNG required. And risks of price volatility as well, deriving from geopolitical factors (e.g. the current Red Sea crisis and the US decision to ban the construction of new gas liquefaction plants in the future to limit gas exports). Finally, risks of temporary LNG shortages following episodes of outage in liquefaction/regasification plants, often located in other continents of the world.

In summary, Europe has rapidly moved from a protracted situation featuring a relatively stable gas supply scenario (reliable pipe supplies, long-term contracts, stable and predictable prices) to a situation much more exposed to volatility resulting from strong interrelationships between the various actors in the gas supply chain (liquefaction, maritime transport, regasification, storage, internal transportation, and local distribution). This new scenario requires a constant monitoring and an active role by the market players to avoid gas shortages and price spikes.

How far is your reach/distribution network now and how has that changed in recent years?

Italgas Group, through various entities such as Italgas Reti, Medea, Toscana Energia in Italy, and Enaon in Greece, operates more than 81,000 km of networks serving about 8 million users. We are the market leader in Italy and the sole operator in Greece.

The 2023-2029 Strategic Plan foresees, by 2029, the installation of approximately 3,000 km of network, including extensions, repurposing, new methane gasification and network conversion, serving 9.7 million users, through a combination of organic growth, award of new gas concessions and acquisition of smaller players.

The investment plan we have been executing since 2017 is strongly focused on the full digitalization of the Group’s assets and processes, as well as the upgrade of pipes and plants and the refurbishment of obsolete components, fulfil the repurposing of the whole network to be ready to receive and dispatch blends of gases, including green ones such as biomethane, hydrogen, synthetic gas.

The digitization effort put in place reflects the vision that no energy transition is possible without the effective sector coupling between gases – and I underly gases – infrastructures and electric ones, to ensure security of supply and achievement of environmental goals. With our plan we believe we concretely contribute to the energy transition. And the entire company organization is fully committed to achieve this.

Part of your customer promise is to ensure the safe, efficient, and sustainable distribution of gas, are you finding your customers are increasingly interested in the sustainability side of things?

Safety is a no brainer for Italgas and we accept no compromise when talking about it.

To follow on you question, in the Countries where Italgas is active, Italy and Greece, we observe that communities not yet served by methane distribution network show keen interest in obtaining the supply of gas by promoting the extension of the existing networks allowing natural gas to replace much more polluting fuels.

Likewise, where the gas network is already present, the ongoing developments on the biomethane front are watched with a great interest by the market, as proven by the wide interest raised by the first biomethane producing plan connection executed by Italgas in Italy.

More generally, the transition from the supply of 100% methane to blending with green gases attracts the interest of a vast audience of observers. For this reason, the repurposing plan that Italgas is implementing on its assets is generally more than welcomed by market players, whether investors, experts, mass media and end-users.

It feels like the energy transition has become a large part of Italgas' DNA, especially with the launch of your next generation hydrogen ready gas smart meter? How has that gone?

The launch of Nimbus, our advanced, hydrogen-ready, gas smart meter, follows a 2-year development plan entirely run in-house by Italgas. We started from the definition of our needs in terms of reading accuracy, duration of the meter battery, environmental concern and, of course, hydrogen readiness. We developed a concept around our needs, and we realized a prototype fulfilling all the technical requirements. The prototype has undergone successfully over 300 lab tests and obtained a vast variety of international certifications as a proof of its adequacy. As of today, we have already installed thousands of Nimbus meters in Italy and we are monitoring them to ensure their performance is in line with our targets. So far we are fully satisfied and, to be sincere, the results from the field in term of Nimbus’ performances even exceed our expectations.

At the same time, we are recording a lot of interest by various major gas distributor worldwide, that would like to deploy Nimbus in their Countries. The meter is not yet available for sale, but we are working hard to launch it officially also for third parties by early 2025.

What are the next steps, both in terms of the rollout, but also your approach to decarbonisation?

Our short-term target is to validate Nimbus meters by the end of 2024. We are installing them day after day, and we are monitoring their performances for an adequate period.

After the product validation has been achieved, we target to start the large-scale production by early 2025 and soon after to initiate the replacement plan of our GPRS-technology based smart meters installed in Italy as well as to replace traditional meters installed in Greece. We will replace over 5 million meters by 2029.

As to decarbonisation, we are strongly committed to reduce methane emissions from our gas distribution network as well as reduce our energy consumption and exhausted gas emissions related to gas distribution. To achieve these challenging targets, we are developing and adopting innovative technologies, such as laser spectroscopy for gas leak detection by US based Picarro, which have allowed us to reduce dramatically the amount of fugitive emissions reaching unprecedented low levels. All those actions are integrated in our strategic plan.

On top of that Italgas is active in the energy efficiency sector with the Energy Services Company Geoside. The most recent strategic move has been the acquisition of three companies active in the water infrastructure sector. We expect to deploy also here our unique expertise as network managers reducing water leakages and therefore fostering water and energy savings and contributing to the achievement of the targets set by the European Union and included by the Italian Government into the national Recovery Plan.

Finally, what are your top 3 predictions for 2024 across the European energy market?

I believe that natural gas prices will remain not distant from current levels and the market will prove to have become more resilient with regards to international issues.

We will observe a further increase in renewable energy generation, which will put under increasing pressure the stability of the electric grids – this is a major topic that seems to be overseen from the electric-fans.

The upcoming European elections will likely have an impact on the EU energy policies. I would not exclude some discontinuities, especially on hot issues that recently gained a lot of attention by the public opinion such as the role of gas as a transitional fuel and the strategic significance of renewable gases.

Pier will be speaking at the European Gas Conference in March in Vienna. Find out more about how you can join industry professionals at the European Gas Conference, organised by the Energy Council here.